based on materials from the site - By Yellow News

The cryptocurrency Stellar XLM has formed a 'bull flag' pattern on daily charts, indicating the potential for a significant price movement to $0.67, as technical indicators suggest a possible bullish breakout in August. The recent phase of altcoin consolidation followed an 84% rise between July 8 and July 14, creating a foundation for what analysts consider a classic continuation pattern.

The formation of a 'bull flag' is a classic example of market consolidation following a rapid price increase. From July 8 to July 14, XLM demonstrated an 84% increase, forming what technical analysts refer to as the 'flagpole' of the pattern.

Since this initial rise, the cryptocurrency has traded in a horizontal channel. This sideways movement forms the flag component of the pattern. Market participants view this consolidation as a healthy pause rather than a reversal signal.

Technical analysis theory suggests that 'bull flags' indicate temporary resting periods for buyers before the resumption of upward momentum. The pattern forms when strong buying pressure pushes prices up, followed by a brief consolidation during which traders take profits and accumulate new positions.

The liquidation map for XLM reveals significant clusters of liquidity at the $0.42 level, located above the current trading range. These clusters typically act as price magnets in highly leveraged markets, drawing prices towards areas of high liquidation activity.

Liquidation maps show where traders have placed stop-losses, take-profits, and margin liquidation levels. Large clusters indicate significant trader interest at specific price levels. For XLM, the visible concentration near $0.42 suggests a potential price movement upward to this level.

This liquidity data supports the technical analysis of the pattern. The combination of the 'bull flag' pattern and favorable liquidation positions creates, according to analysts, a compelling foundation for further price growth.

Certain conditions are required to maintain the 'bull flag' pattern. The initial rise must demonstrate high volume and clear directional momentum. The subsequent consolidation should occur on lower volume, and prices should remain within specific boundaries.

Liquidation levels play a crucial role in cryptocurrency pricing due to the prevalence of margin trading.

As prices approach areas of concentrated liquidation, the resulting forced buying or selling can accelerate price movement in that direction.

Technical analysis is based on recognizing patterns and historical precedents, although market conditions can undermine even well-formed setups. Traders typically wait for confirmed breakouts of resistance levels before putting capital into pattern-based trades.

The methodology for measuring movement suggests that XLM could reach $0.67 upon successful completion of the 'bull flag' pattern. This target is determined by forecasting the height of the initial rise of the flagpole above the breakout point. The calculation provides a reasonable growth target based on the historical dynamics of the pattern.

However, technical patterns carry inherent risks. If XLM fails to hold above the horizontal consolidation channel, the bullish thesis will be invalidated. A breakout below current support levels could trigger selling pressure toward the $0.38 area.

Market participants are tracking both scenarios when trading on patterns. Risk management becomes necessary given the binary nature of technical breakouts.

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